DeepSeek's Disruptive Impact: Shaking the European Tech Sector

European tech stocks experienced a downturn due to concerns sparked by Chinese startup DeepSeek's low-cost AI model. The pan-European STOXX 600 fell, notably impacting companies like ASML and Siemens Energy. The volatility index rose as investors anticipated U.S. tech earnings and key economic announcements.

European technology shares faltered on Monday in response to anxiety over Chinese startup DeepSeek's budget-friendly AI model, casting doubts on returns within the AI business and the need for expensive hardware.

The pan-European STOXX 600 index dropped up to 0.8% amid a global sell-off, after DeepSeek introduced a complimentary assistant said to operate with lower-cost chips. European tech stocks slid 3.4%, facing their biggest drop since October; ASML dropped 7%, hitting a two-month low, while ASM International tumbled over 12%.

As US tech giants prepare to announce earnings, uncertainties over potential US-EU tariffs loom. The week also features major central bank decisions, with ECB hinting at a rate cut and the Fed expected to maintain rates. Meanwhile, sectors like food, beverages, and utilities remain resilient.

(With inputs from agencies.)